Research by the international rating agency Moody's shows that the Czech Republic, where only 2.4% of the EU population lives , is home to more than a quarter of the approximately 46,000 Russian-linked companies operating in the 27 Commonwealth countries.
Bulgaria with 9,500 companies is the second most preferred country for Russian companies. Germany, which is seriously ahead of Bulgaria and the Czech Republic in terms of both economic power and population, is in third place with 4,200 Russian companies.
Russians have long loved doing business in the Czech Republic. Political and economic ties dating back to the communist era, language proximity and gaps in the Czech Republic's regulatory systems encourage Russian investors to use the country as a gateway to EU markets. The trend is even upward - despite the dramatic cooling of relations between Moscow and Prague, which began in 2021 and deepened after Russia's invasion of Ukraine.
"The easiest way for Russians to secure a residence permit"
The war in Ukraine gave an additional incentive to increase the Russian business presence in the Czech Republic, says the analyst from the Association for International Relations in Prague Pavel Havlicek. A business project or the purchase of a property is "the easiest way for Russians to secure a residence permit in the Czech Republic," he explained to DV.
"We cannot avoid a deeper discussion about the countries where Russian influence has reached a level that threatens not only the unity of the EU or NATO, but also our security," Czech Prime Minister Petr stated at the end of August Fiala. At the same time, the Czech counterintelligence BIS has long warned about the threat from within, and recently reiterated that the many Russian-owned companies definitely do not contribute to national security.
According to analysts, the main concern is that among the many real companies and individuals there may be quite a few spies or saboteurs hiding. The likelihood of Russian intelligence seeking such avenues increased in 2021, when Prague expelled a hundred Russian embassy officials on suspicion of being secret service agents.
There is also concern that these companies may be used to circumvent the sanctions imposed on Russia. Against the backdrop of complex global trade and financial networks, the EU is trying to control the flow of funds and equipment to Russia, and several such violations have been uncovered in the Czech Republic itself.
The importation of crime from the east is also a concern for the authorities. According to the Czech branch of "Transparency International" The Czech Republic remains a country with favorable conditions for money laundering, especially for persons from the former Soviet Union and its satellites. And the Czech National Center for Combating Organized Crime (NCOZ) reported in July that significant movement of post-Soviet criminal organizations and increasing efforts to circumvent sanctions contributed to a worsening of the country's security situation in 2023.
Money laundering undermines the country's economy, says Lukasz Kraus from the Czech non-governmental organization "Restoring the State". In an interview with DV, the lawyer points out, for example, the negative effect on the Czech housing market, where property prices have already become unaffordable for many.
Government must act
Prague-based think tank Datlab reported that last year Russian companies, including those linked to sanctioned individuals, managed to secure 2.5 billion euros worth of public procurement in the EU - despite the sanctions. Since this study was published, the Czech government, which is among Kiev's staunchest supporters, has been attempting to fight back - for example through its own regime of even tougher sanctions.
Critics, however, also see a number of gaps in the government's actions - for example, in relation to opaque ownership, behind which Russian interests are hidden. Datlab has estimated that only 35% of companies believed to be Russian-owned are correctly entered in the Czech registers.